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Published: August 27, 2013
 / Autumn 2013 / Issue 72

 
 

An Uncommonly Cohesive Conglomerate

At that time, most of the plant’s notable results came from just a few pockets of excellence within it. One production unit in particular—which made brush seals, a new component designed by the plant’s engineers that improved the sealing of turbine engine bearings—had achieved great success after organizing itself into cells, or self-managing teams of five to 10 people. This cell approach seemed so effective that the plant’s leaders made it the centerpiece of their effort, forming a task force to implement cells and related practices more broadly throughout the plant.

Eight production staff members, identified as “natural leaders,” were taught how to analyze and improve production systems, with methods drawn from their own brush cell experience and Japanese quality practices. The plant’s assembly lines were restructured into 24 flexible cells. The natural leaders spent mornings in seminars learning production concepts taught by in-house experts and afternoons in teams teaching co-workers and showing them how to implement the ideas. Robert Ponchak, the plant manager, got directly involved; he developed what he called his “Maine vision” to inspire the workers, talking about it day and night across all three shifts.

Before long, the productivity gains and operations improvements were noteworthy enough that Pratt & Whitney’s VP of operations took notice. He delayed and then canceled the closure plans. The plant became known for its quality and productivity gains; indeed, its unit output held steady even as its workforce decreased from 2,100 to 1,500 people. Moreover, the plant took on production of higher-quality, higher-value parts, leading to a fivefold increase in revenue. By 1996, people were visiting North Berwick not only from UTC divisions but from other manufacturers around the world to benchmark its operations.

Moving Up to Scale

Others in Pratt & Whitney wanted to replicate what North Berwick had accomplished. Two North Berwick team members were asked to join three experts at headquarters in East Hartford, Conn., to form a team charged with developing a flexible manufacturing program for all of Pratt & Whitney. They benchmarked other companies, added some techniques, and tested their program in a nearby factory. The ACE name originated there, when one of the shop-floor operators suggested calling the program Achieving Competitive Excellence. The acronym was easy to remember, and its association with top-gun pilots resonated at an aircraft company like Pratt & Whitney.

In June 1996, Pratt & Whitney launched its company-wide ACE program. It was sponsored from the top, led by operations vice president Mark Coran and championed by Pratt & Whitney president Karl Krapek. By now, ACE had evolved beyond merely making improvements on the factory floor. Pratt & Whitney reorganized all its departments into cells and encouraged team members to propose changes, implement them, and set their own clear standards. General managers nominated a few people from each facility to be “ACE Pilots,” a broader-based version of the natural leaders of North Berwick. These designated specialists attended regular weeklong training events that included hands-on projects as well as classroom teaching for an ever-increasing array of quality and management methods (see “The Turnback Factor). When the ACE Pilots returned to their home sites, they had a mandate to teach, implement, and lead further changes. ACE added new ideas, such as recognition for performance gains; they certified cells as bronze, silver, or gold, depending on such measures as skills, operational improvement, employee satisfaction, safety, quality, and financial success. Impressive increases followed—not only in the cells’ business performance, but also in the enthusiasm with which people came to work and engaged in improvements.

From Company to Conglomerate

In most companies, efforts like ACE prosper within one division or region, but fail to move across boundaries. At UTC, once they recognized its value, George David and the other top executives resolved to make ACE work for the entire UTC system. They set up cross-business councils, which are still in place, and which have become influential and important networks for UTC leaders. The most senior of these networks is the Presidents Council—a group composed of the CEO, CFO, division presidents, and other key functional leaders. It meets every month for a full day. Individuals and teams are occasionally invited to present to the Presidents Council. This is a mark of status and also, at times, a cause for apprehension.

 
 
 
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Resources

  1. Ann Graham, “Too Good to Fail,” s+b, Spring 2010: Profile of India’s Tata Group, another successful conglomerate with a very different strategic orientation.
  2. George Roth, “United Technologies Corporation: Achieving Competitive Excellence (ACE) Operating System Case Study,” (PDF) LAI Case Study (Nov. 30, 2010, released Mar. 7, 2011): The in-depth case study, representing three years of observation and interviews, on which this article is based.
  3. Robert E. Spekman, “United Technologies Corporation: Supplier Development Initiative,” Darden School of Business, July 19, 2001: More detail on the supplier initiative, capstone to the ACE program.
  4. James P. Womack and Daniel T. Jones, Lean Thinking (Simon & Schuster, 1996): Describes many of the threads of theory and method underlying UTC’s quality work. Chapter 8 discusses Pratt & Whitney’s advances in the early 1990s.
  5. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.
 
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